Goldman Sachs Drops Stark Forecast for AI Stocks

What happened

Goldman Sachs chief economist Jan Hatzius expects the yearly change in hyperscaler investment as a share of U.S. GDP to peak at about 1.5% in the fourth quarter, though AI spending itself is not expected to decline.

Confirmed

Global impact / market context

If the extra boost from AI infrastructure spending starts to fade, companies like Nvidia, Microsoft, Amazon and Oracle must show earnings growth from other sources, which means profit growth has to carry more of the weight for AI-linked stocks.

Analyst inference

Hyperscalers such as Amazon, Microsoft, Alphabet, Meta and Oracle are projected to spend roughly $725 billion to $800 billion on capital expenditures, meaning long-lasting investments like data centers and chips, this year, so spending stays high even as its added push to growth slows.

Analyst inference

What to watch

1. Watch whether the yearly change in hyperscaler investment as a share of U.S. GDP actually peaks near 1.5% in the fourth quarter, as Goldman Sachs chief economist Jan Hatzius forecasts. Confirmed
2. Goldman's optimistic scenario considers a 55% rise in AI-related stocks alongside 20% gains in other areas, a proposed path investors can compare with actual results rather than a confirmed outcome. Proposed
3. Track earnings growth at Nvidia, Microsoft, Amazon and Oracle as infrastructure spending growth moderates, because weaker profit per sale or slower revenue could pressure investor positioning in AI-linked shares. Analyst inference

Evidence

• gurufocus.com